The Growth of Apple

1.

What, historically, have been Apple’s competitive advantages?

Apple Inc. was founded by Steve Jobs and Steve Wozniak in 1976 with the mission to make productsthat were cutting edge, designed beautifully, and easy to use. They have been able to keep thiscompetitive advantage not only by relying on its own proprietary designs but by refusing to licensetheir hardware to third parties. They tend to be a leader in new technologies such as the firstdesktop solution, mp3 player, and touch screen cell phone.

2.

Analyze the personal computer industry. Use the tools you learned in your strategy course.Consider the following factors: competition in the PC industry, barriers to entry, power of PCbuyers, power of suppliers (Intel & Microsoft), threat of substitutes. Is the competitiveenvironment favorable or problematic for Apple? (In other words, is this a hard industry tocompete in?)

The competitive environment was favorable at the inception of Apple. The only barrier at the timewas the actual knowledge capable of developing the technology never seen before. They quicklybecame the industry leader when they came out with Apple II and were able to launch a successfulIPO which would allow them to raise needed capital to develop more products. At the time the PCindustry gained momentum quickly and Apple was responsible

for sparking a “computingrevolution” with annual sales reaching $1 billion in less than three years.

Once IBM entered the PC market in the early 80’s the competitive environment changed drastically.Quickly their PC’s became the industry standard and

they were able to spread their product byselling the rights to the system so other producers could easily replicate the product. At this point itwas easy for producers to enter the market as long as they had the capital to purchase the rights tothe system. This had a very negative impact on Apple and caused net income to fall 62% in just fouryears, after being industry leader just years before.The new structure of

the PC Industry lead to what is called “buyer power.” Since there were s

omany sellers, prices of the PC became more accessible and this eventually lead to a crisis for Apple.

Jobs was forced out and the company began to go in a new direction. By the 90’s

Apple was on therise and was able to catch a part of the market untouched by the other PC competitors. They beganto develop new products like laser printers and also grabbed more than half of the educationmarket. Over time things began to change for the other PC Manufactures and the